Recently, there has been a consistent increase in the use of Cayman funds formed as Cayman exempted companies. The use of Cayman companies (as opposed to ELPs) in the traditional collateral capital call deal has given rise to the need for some unique structures.

Any proposed security over a Cayman exempted company’s right to draw down outstanding capital commitments from its shareholders differs significantly from the arrangements which have become common practice in relation to securing capital call rights of Cayman ELPs.

Unlike a traditional ELP capital call financing, where the capital call rights are a contractual obligation which can be assigned by way of security, the “contractual rights collateral package” in corporate subscription deals is typically linked to the obligations of the company (acting through its directors or investment managers) to issue shares. The creation of an obligation of the investors in the company to purchase shares “to-be-issued” in the future is different from the obligation of an investor in an ELP to fund the remainder of its commitment to the ELP as part of its existing interest and creates enforcement concerns and additional insolvency risks.

Read More

Type

Insight

Locations

Cayman Islands

Share
Twitter LinkedIn Email Save as PDF
More Publications
13 Sep 2021 |

Loans & Secured Financing in the Cayman Islands 2021

First published in Getting the Deal Through 2021. This practice guide provides topical analysis of L...

Contributors: Alexandra Simpson
21 May 2021 |

2021 - A Jekyll and Hyde Year for SPACs

In this article we offer our views on why this has happened and look ahead to the future for SPACs a...

Contributors: Dean Bennett
13 May 2021 |

The 2021 Cayman Islands Real Estate Guide

The Real Estate 2021 guide provides the latest legal information on the impact of disruptive technol...

Contributors: Norman Klein
13 May 2021 |

British Virgin Islands: Mergers & Acquisitions Comparative Guide

This country-specific Q&A provides an overview to Mergers & Acquisitions laws and regulati...

Contributors: Brittany Cummings
13 May 2021 |

Cayman Islands: Mergers & Acquisitions Comparative Guide

This country-specific Q&A provides an overview to Mergers & Acquisitions laws and regulati...

Contributors: Dean Bennett, Vance Power
15 Apr 2021 |

6 months on: Temporary relocation and residency by investment continues to increase in popularity

Six months on from the new digital nomad programmes, did the predicted upward trend reflect the real...

25 Mar 2021 |

Full Steam Ahead at the Jersey Ships Registry

Against a backdrop of uncertainty surrounding Brexit and the difficulties created by the global pand...

24 Mar 2021 |

Economic Substance update Q1 2021

Economic Substance update Q1 2021

12 Mar 2021 |

Material adverse change clauses in light of the Covid-19 pandemic

Experts from each of our key global offices provide jurisdiction specific advice and answer question...